Buying a Home with a Las Vegas FHA Loan
A Federal Housing Administration (FHA) loan is a government-backed loan that makes home ownership a possibility for lower-income Americans. FHA loans are a form of federal housing assistance. They are available for single-family homes, condos, and multi-unit properties. An FHA loan Las Vegas makes purchasing or refinancing a home easier than it would be through a conventional mortgage, which has more restrictions for qualification and is more expensive than an FHA loan.
What are FHA Loans?
FHA loans were created in the 1930s after the financial crisis of the Great Depression, during which time loan defaults and home foreclosures soared. FHA loans were launched as a way to help Americans buy and sell homes without facing foreclosure. They were also used to stimulate activity in a dying housing market. Today, FHA loans are still one of the most enabling types of mortgages. They are attractive to lenders for their ability to reduce lending risk, and they also allow individuals to buy property that they might not otherwise be able to afford. (Read about fixed-rate mortgage loans here.)
FHA Loan Requirements & Qualifications
The requirements for an FHA loan Las Vegas are lower than those of most mortgages. An FHA loan makes it possible to take out loan with a low or even non-existent credit score. In an FHA loan, your credit score influences the down payment you must make. With a credit score of 579 or less, you can take out a loan with a down payment of 10%. If your credit score is higher (580 or above), you can put down a lower down payment. In some cases, the down payment can be as low as 3.5%. Unlike most mortgages, which require you to repay the principal amount plus interest, there is no monthly loan repayment required with an FHA loan. Instead, homeowners simply pay a mortgage insurance premium. This helps the FHA insure a loan issued by a lender. It also helps protect the lender in the event that the homeowner defaults on a loan.
Although FHA loans are typically based on credit score, it’s also possible to get a loan with no prior credit history. If you do not have a credit history, a lender will instead look at other payments that you’ve made in the past, such as rent payments and utility bills, to determine your initial down payment and insurance premium payment. Since FHA loans are more forgiving than other types of mortgages, they also make home ownership possible for people who have previously lost homes to foreclosure. Although FHA loans allow more flexibility for borrowers, keep in mind that having a lower credit score and down payment will make your insurance rates higher.